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What Types of Property Investment are there?

By Edited Nov 13, 2013 0 0

There are many misconceptions about the property market, which might explain why so many of you are dubious about investing in property. Use the word 'property investment' and naturally you'd automatically assume that we are talking about residential property investment and the selling of property.

However when it comes to making real sizeable profits from property investment, there is much more to this niche than meets the eye.

First, is the common misconception that you can only invest in property if you plan to renovate and sell it on.

Now during the property boom of 2006/07, this property investment strategy worked like magic as you could easily invest in a property, do a little work and sell it on for a profit of at least £5,000 - £20,000. Inflation, property demand and the economy… they did the rest of the work for you.

Nowadays though, such investment schemes experience little or no success. Why? Because unless you have got the cash and the strategies to renovate these properties fast, you cannot hope to get them onto the property market quick enough to beat depreciation.

But isn't the property market in a state of appreciation?

It is true that the UK property market has experienced positive price fluctuations over the last 6 months increasing in value by over 8%. However, despite these appreciations, property experts Rightmove are predicting that property prices will become static during 2010 and that the number of properties put up for sale will be 50% less than those offered in 2007.

Faced with such restrictions, you'd be lucky to achieve a strong enough capital growth to compensate for the cash injected into the renovation process.

What else is there?

The truth is, there is a much simpler means of supplementing your income that if harnessed correctly can work to support you long into your retirement: buy to let investment.

During 2009 alone there has been a 50% increase in 'accidental landlords' who have chosen to rent their properties rather than sell because of the strenuous economic climate.

Faced with negative equity losses and 30% property price falls, transforming property into a buy-to-let has proved to be a highly profitable niche.

Yet even within this niche itself, there is much more to buy to let investment than residential property.

Although it may dominate more than 80% of the industry, catering for student, social housing, off-plan and HMO's, you can also choose to get involved with:

• Commercial property investment – offices, medical centres, hotels, stores etc
• Land investment (here you can either sell the land to developers or rent to farmers, authorities etc)
• Overseas property management – holiday homes, second homes etc

Investing in property is undoubtedly a lucrative niche to get involved in if you are serious about boosting your annual income and supporting your retirement.

The trick is to choose your property investments wisely, know/understand the niche you are investing in, check there is a tenancy demand and most importantly ensure that your properties can produce positive cash flows of £500-£1,000 every month (after your monthly repayments have been deducted).



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